ShrinkageMay 29, 2014
Perhaps never in history has there been a prolonged period of economic stagnation with no accountability for the administration in charge. From 2002-2008, the United States experienced above normal economic growth, yet there were howls from the Left gladly echoed in the Mainstream Media that the economy was sluggish, not good enough, even anemic. It was that or a a prolonged engagement of class warfare, that only a privileged few benefited during those years. But the announcement this morning that the Gross Domestic Product actually shrank last quarter by 1 percent (after an initial reading of .1 percent growth) shows that the economy has gone from stagnant to negative growth. Or, as they would say on Seinfeld, "Shrinkage!" In a $16 trillion economy, that's means our economy has about $160 billion less in economic activity or $640 billion less on an annualized basis. That's a lot of jobs.
Speaking of jobs, while the unemployment rate gives the appearance of dropping, in fact, the real unemployment still remains at recession-like, if not depression-like, numbers. According to many economists, when the number of people who have dropped out of the workforce and those who are underemployed (working part-time while looking for full-time work), the unemployment rate is well over 10 percent. Don't even think about adding in those working full time who are making less money than in their previous jobs.
Yet, no one seems to care. It's gets a mention on the news, maybe a little more on business channels, but not much more. According to economist and author Stephen Moore, writing at The Heritage Foundation's The Foundry Blog, the Obama economy is costing families. The unreported statistics are horrifying:
The Obama expansion is now $2 trillion short of where we would be if growth in this recovery had matched the Reagan recovery that started in 1982.
That is to say the average family would have about $5,000 more income each year to spend if it were not for this slow recovery. The Census Bureau reports that median household income is down by $1,800 since this so-called recovery began.
Worse, investment plummeted in the first quarter of 2014 by 11.7 percent from the same period in 2013. That was the biggest decline since the recession ended in 2009. Without investment, businesses can’t grow and wages won’t rise. Capital investment by businesses is a strong leading indicator of future prosperity.
Want more? The number of college graduates working below the federal minimum wage now is double what it was in 2007. No wonder young voters are disillusioned with the anointed one.
The difference? Presidents Reagan and George W. Bush cut taxes and allowed families and individuals keep more of their hard earned money. President Obama has raised taxes — significantly and repeatedly — and increased the size, scope and role of the federal government, which not only increases federal spending and the budget deficit and federal debt, but involves itself in the lives of every facet of business and every day life. That stifles and even decreases job creation. But the growing economy under a less regulatory and confiscatory atmosphere is contrary to the narrative of "government is good, bigger government better."
As Moore continues:
. . . the government is underperforming and this is the worst recovery from recession in 75 years. Ideas do have consequences — especially bad ones.
Whether it's a bad idea or not, President Obama's ability to get more people than ever hooked to some type of government reliance is not the result of incompetence. It's the result of a policy objective to borrow and spend more and more frequently — and shrink the private sector.